Portfolio managers, who last month were at their most bearish on commodities for nearly two years, returned to a neutral position on the asset class, a survey by BofA Merrill Lynch said.

The rebound reflects waning expectations of a "hard landing" for China's economy next year, following data showing that the country's above-target inflation rate appeared to be responding to measures to toughen monetary policy.

"The shift back to a soft landing scenario in China has caused sector rotation toward global energy and materials," the bank said.

This was reflected in share investments too, with survey, of fund managers in charge of a total of $665bn, showing "increased allocations to commodities and commodity-related equities".

The rediscovered interest in commodities defies growing fears of deflation also identified by the survey, with inflation expectations at their lowest since March 2009, at the depths of the world recession.

"As concerns about inflation in emerging markets erode, the question of deflation could be on investors' minds," BofA Merrill Lynch said.

However, the findings tally with US regulatory data overnight showing a continued revival by managed money's interest in agricultural commodities.

The net long position held by managed money, often taken as a proxy for speculators, returned above 500,000 contracts in the week to last Tuesday, data from the Commodity Futures Trading Commission showed.

That represents a rise of more than 14%, or 60,000 lots, in four weeks.

Corn boost

In Chicago corn, managed money raised its net long position by 23,700 contracts to an eight-week high of nearly 219,000 lots.

The increase was fostered by expectations that the US Department of Agriculture would, in a key crop report last Wednesday, cut its estimate for the domestic corn yield, which it indeed did, Rabobank said.

Sentiment also improved for Chicago wheat, of which managed money cuts its net short position by nearly 9,400 lots, to 26,157 contracts.

Coffee out of favour

However, managed money's net long position in Chicago soybeans dropped by 7,400 lots to less than 28,300 contracts, the lowest figure in more than a year.

And investors' faith in New York raw sugar futures waned, with the net long cut by 10,400 contracts to 97,700 lots, with trims also to net long holdings in cotton and arabica coffee.

On Monday, exchange operator NYSE Liffe revealed that speculators had increased their net short in London robusta coffee by 3,000 contracts to more than 10,500 lots.

But the net short in London feed wheat was cut by nearly 250 lots to 409 contracts.